Most reactions to the tripartite meeting at the UN yesterday between Pres. Obama and Prime Minister Netanyahu and Pres. Abbas were negative, and this is entirely understandable since no one had anything particularly new to say. Reaction in the Arab world was particularly agitated, with many commentators arguing that Obama has "capitulated" to Israel's position on settlements, and some even throwing up their hands entirely about any possibility of progress under this president. Most Israeli reactions were not particularly more enthusiastic, but Foreign Minister Lieberman did claim vindication for his government's position in refusing to come to public terms with the United States on a settlement freeze. Most American reactions seem to share the President's evident frustration with the parties, some sympathetically and some feeling that Obama has been naïve or at least unduly ambitious in his engagement thus far.

It is certainly true that Pres. Obama has been unable to reach a public agreement with the Israeli government on a settlement freeze, but this isn't necessarily or simply a bad thing. Under the circumstances, it would appear that Netanyahu in practice could not accede to the full scope of American demands that a settlement freeze publicly commit to a longer timeframe and to including all parts of Jerusalem without seriously risking the collapse of his government. His right-wing allies were willing to go along with a settlement freeze limited in time to nine months or so but not one that includes all parts of Jerusalem. Neither the Americans nor the Israelis were prepared to back down, so now, in effect, the Obama administration has decided to move on towards permanent status talks anyway.

One way of reading this is that Obama has backed down, because he is probably not going to be pursuing the issue aggressively in the coming weeks. However, it is equally true that Obama has undoubtedly secured wide-ranging private assurances on settlements from Israel without compromising any of the principles he has laid down. The Israelis may be claiming to have gotten something out of Obama, but in fact Obama has apparently secured significant private assurances from the Israelis without amending his position (the administration never said this was a precondition to permanent status talks) or without pretending that Israel has agreed to something it refuses to agree to.

As in his dealings with the Israelis, Obama has had only partial success with the Arab states. Apparently, some of the smaller Arab states have, like Netanyahu, privately agreed to a partial accommodation of Obama's position, some reportedly promising a return to the status quo ante sub-recognition diplomatic links involving trade missions and so forth that existed before the second intifada. However, it would seem that new diplomatic overtures from key states such as Saudi Arabia were never going to be forthcoming in connection to a settlement freeze as Obama had been proposing. This reticence, while it might be justifiable on many grounds, has given Netanyahu a certain degree of cover in claiming that he is, at least, not the only party to be only partially agreeing with Pres. Obama's demands.

What is fascinating is that, having hit a brick wall with his initial proposals, Obama is not, in fact, backing down at all. Rather, he is doubling down on Middle East peace, willing to accept the political price of being defied by both the Israeli government blatantly and the Arab states to a lesser but still significant extent, and is not taking no for an answer. Other administrations would have already accepted the Israeli position as a legitimate and useful one, and congratulated Israel for the 9-12 month settlement freeze, not including buildings already under construction or Jerusalem. Obama has completely refused to do that, but has also not allowed this stonewalling by Netanyahu to torpedo his entire Middle East peace initiative. Instead, he has absorbed the blow, so to speak, and, in effect, called Netanyahu's bluff by insisting that the parties go forward into permanent status talks anyway. The New York Times today reports that administration officials including the President have assured the Palestinians that these talks will have "clear terms of reference," in other words that the talks will look a lot more like the ones the PLO wants to have been those that Netanyahu will be comfortable with

If Netanyahu was trying to sabotage Obama's peace initiative at an early stage by refusing to accommodate his demands for a complete and total settlement freeze, then this plan has not been a success, but a failure since the President is insisting the process move forward and pocketing whatever private assurances he has gained from Israel without any public acknowledgment of them. It's true, and regrettable, that he has not succeeded in achieving his first major goal, but it's important that President Obama is not letting this deter him from pushing forward, and it's extremely premature to conclude, as some ideologues on both sides (who don't want peace talks to succeed anyway) are, that Obama's initiative has "already failed." The administration might be accused of a miscalculation, but not of a fatal failure.

I think we can be sure that even though there has not been a public accommodation on settlements, there is a private understanding that will mean that beyond what has already been announced (significant though that is), little, if any major, settlement activity will actually be taking place for the next year or two. Moreover, Netanyahu may have been able to stonewall Obama on settlements, but this only intensifies the diplomatic heat he will face going into permanent status talks. And, of course, there is the point of view (which I find extremely plausible) that Netanyahu deeply fears these negotiations because they will demonstrate not only the distance between his position and that of the United States on peace, but also how much closer to the American view the Palestinian one currently is.

The word that is defining the American position repeated by both President Obama and Secretary of State Hillary Clinton in recent days is "determined." They have been carefully sending the message, largely aimed at Netanyahu I think, that they are not going to be stonewalled into giving up on Middle East peace if that is his or anybody else's intention. I think the administration is counting on the idea that sustained American pressure and engagement will, eventually, pay dividends and that Israeli and Arab leaders can only resist for so long. It would also appear that they are focusing on laying the groundwork for a process they envisage taking a number of years, and they are well aware that the shelflife of Israeli governments is usually quite limited. By refusing to accept Israel's partial accommodation of his demands on settlements as satisfactory, and also refusing to be deterred in pursuing even broader negotiations that place all the permanent issues on the table, with "clear terms of reference," Obama is demonstrating that he is neither going to back down nor walk away even when the limitations of American influence, in this case on Israel, are publicly demonstrated. He is going to take the hit and keep on coming.

For Palestinians, this is definitely not all bad news by any means. True enough, the United States was not able to secure a complete settlement freeze, and, in all honesty, I don't think anyone really expected that it could. That the American demand remains on the table, unfulfilled, is definitely useful from the perspective of Palestinian diplomacy. President Obama has made it clear that President Abbas is a full partner in the negotiations he is trying to start, and it seems likely that Palestinians have much more of an interest in moving quickly into permanent status talks, especially if they have clear terms of reference and tackle all the issues seriously and/or simultaneously, than the present Israeli government seems to.

Finally, not only does the Palestinian position seemed to be closer to the US one than Israel's is, the Palestinians have demonstrated much more cooperation with the Obama approach than Netanyahu has, which is another significantly useful development. In the Arafat era, President Bush, who was keenly interested in personalities and had an instinctual approach to diplomacy, developed a powerful disliking for the Palestinian president that Israel was able to repeatedly exploit to its advantage. The same ought to be true in reverse in this case, not that this is personal or instinctual, but given that the Palestinians are the one party that has really spared little effort to cooperate with the Obama administration so far, this ought to prove extremely useful to them going into permanent status talks.

I don't think there's any doubt that the Palestinians have a clear interest in the resumption of these negotiations, even without the settlement freeze that has been established as a precondition. Of course, critics who are taking an entirely pessimistic perspective are, as always, standing on solid ground -- Middle Eastern diplomacy, especially on the Israeli-Palestinian front, offers few historical and political bases for optimism (which I have always warned against anyway). If those critics are right, and even as a hedge against quite possible if not probable failure to develop major progress in the next 12-24 months, the question is: what can Palestinians do proactively and independently of diplomacy and the interests, and even whims and caprices, of the Israelis, Americans and Arab governments?

The answer, quite clearly I think, lies in the proposal advanced by Prime Minister Fayyad's new government program that Palestinians move quickly and unilaterally towards creating the administrative, economic and infrastructural elements of statehood in spite of the occupation, building "de facto statehood." If anyone is frustrated, and who could blame them, by what happened in New York yesterday, and they don't have a more serious alternative than Fayyad's proposals (and I'm not aware of any), they should wholeheartedly embrace his program for unilateral, proactive and constructive institution building towards Palestinian statehood no matter what Israel says or does and no matter what happens at diplomatic meetings in New York or elsewhere.